Here is the second part of our review of the most important economic events of 2015.
On March 2, Fitch rating agency confirmed Romania’s BBB minus rating for long-term loans, and its BBB rating for local currency loans, with a stable perspective, also referring to the positive economic prospects, backed by moderate monetary policies. Fitch’s rating reflected Romania’s economic growth in 2014, which exceeded Fitch’s expectations, as well as the fact that industrial production and retail trade continued to support internal demand, offsetting the slow growth of exports.
In early March the Republic of Moldova started importing natural gas from Romania through the Iasi-Ungheni pipeline, at 20% less the cost of Russian gas. Russia had previously been the only gas supplier to the Republic of Moldova. Moldova has this year imported over a million cubic meters of gas from Romania, which however does not meets its consumption demand. The authorities want to extend the pipeline all the way to the capital Chisinau.
Also in March, the National Bank of Romania board decided to cut the reference interest rate by 0.25% to a yearly 2%, a new all-time low. Additionally, the central bank of Romania decided to keep the minimum compulsory reserve levels for liabilities in national and foreign currencies at 10% and 14% respectively.
On April 21, the European Commission disbursed a temporary financial aid package worth 38 million euros to Romanian authorities in an attempt to bail out the Hunedoara Energy Complex, owned by the Energy Ministry. The money was aimed at helping the complex maintain its activity in its power plants for the following six months. Headquartered in Petrosani, Hunedoara County, the Energy Complex has a 5% market share of Romania’s energy output and employs some 6,500 people.
On April 24, Bosch Rexroth received 16.6 million euros worth of state aid from the Finance Ministry to carry out a 33 million euros investment aimed at expanding the production facilities and automotive technology in Blaj, central Romania. The project is set to generate 570 jobs and will contribute some 19 million euros to the state and local budget. The German engineering group Bosch accessed the Romanian marked in 1994 and has so far invested 180 million euros, employing some 2,400 people.
Starting April 29, global deposit certificates of the Property Fund were listed on the London Stock Exchange. The Romanian state set up the Fund to compensate people whose real estates had been abusively seized during the communist regime and that could no longer be returned in kind.
On May 7, the National Bank board decided to cut the reference interest rate by 0.25% to a yearly 1.75% rate, a new all-time low. Additionally, the minimum compulsory reserve levels for liabilities in the national currency dropped from 10% to 8%.
On May 15, the Star Transmission branch of the German multinational corporation Daimler announced the completion of a new plant by the end of the year to produce state-of-the-art gearboxes in Sebes, Alba County, with production expected to start in the spring of 2016. The investment is worth 300 million euros and will make available some 500 jobs.
On June 1, the VAT for foodstuffs, non-alcoholic beverages, livestock and poultry, as well as all seeds and plants involved in the production of foodstuffs, was cut from 24 to 9%. The low VAT was applied to all business operators, from producers, sellers and distributors to end-users. According to the Former Finance Minister Eugen Teodorovici, the VAT cut would result in a 0.6% increase in the GDP by the end of the year. Some market studies show that prices dropped by 11% on an average after the VAT cut was introduced, which is also transparent in the current negative inflation rate.
As of July 1, the minimum gross salary went up from 220 to 236 euros. Some 1.38 million employees from the public and competitive sector benefited from the measure.
On July 11, the first motorway segment linking Romania to Hungary was opened to road traffic. The Nadlac II border crossing point, linking Romania’s A1 motorway to Hungary’s M 43 motorway, was also opened to freight and regular traffic.